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Gov. George Pataki and legislative leaders put a bow on the state's new budget this week, simultaneously proving that while lawmakers are not congenitally incapable of producing a timely budget, systemic reforms nonetheless remain necessary.

The $106.5 billion budget spends more than Pataki proposed in January, but less than lawmakers approved two weeks ago, when, for the first time in 21 years, they passed a budget before the April 1 deadline. The plan makes inroads on some urgent problems but also continues Albany's long-standing policy of looking for ways to spend taxpayer money instead of ways to conserve it.

The most significant action was the cap placed on future county Medicaid costs, a skyrocketing expense that was driving property taxpayers to the brink of despair. That deal was struck in the Legislature's March 31 budget. But in negotiations that led to this week's final approval, lawmakers also agreed -- reluctantly -- to trim the program's costs. One of the more significant agreements was the approval of a preferred drug list to cut down the cost of medications, something the governor insisted upon and which Assembly Speaker Sheldon Silver reportedly sold to grudging downstate members.

The reductions aren't enough to pay for the additional expense Albany will inherit, but they are an improvement over the initial plan. Lawmakers should look for ways to bring the program's costs closer to the national average.

Also hopeful is a related agreement to form a commission charged with "right-sizing" the state's health care system. The need is urgent around the state, including Western New York, where a declining population has reduced use of many hospitals, undermining the quality of the care they deliver even as building-related expenses remain high.

The commission may recommend consolidations and even closings, and spokesmen for the governor said the state will have the authority to enforce its program, which will be subject to a single yes-or-no vote by the Legislature. This will be a difficult task, given the support many hospitals have within their communities. But with declining use, the task is urgent if the state is to gain control over health care spending.

What's more, those are the kinds of savings that reduce spending without depriving medical services to those who need them. The public, however, should closely monitor this commission to make sure it's driven by public health concerns as opposed to placating Local 1199 of the Service Employees International Union, the powerful health workers union.

Despite the more-or-less timely completion of the budget, reforms remain urgent. Many are possible, but one sensible one would be to move the start of the budget year. Most states begin their cycles on July 1. That's when New York's should start, too. That would give a diligent Legislature ample time to craft a responsible budget, send it to the governor and have the entire process completed before the deadline.

This year marked a significant improvement over the previous 20, and the Legislature and the governor deserve the credit they are receiving. But there's still work to be done.